Power of recall is not Power of  Tribunal to rehear case,  which is scope of Review of Judgment : NCLAT [Read Order]


The Delhi bench of the National Company Law Appellate Tribunal(NCLAT) held that power to recall is not power of the tribunal to rehear the case , which is the scope of review of judgment.

The present appeal was filed by Appellant Adisri Commercial Pvt. Ltd . The facts of the case is that SIFL and SEFL are financial service providers registered with the Reserve Bank of India (RBI). RBI passed an order in exercise of jurisdiction under Section 45- IE of the RBI Act, 1934 superseding the Board of Directors of SEFL and SIFL.

One Mr. Rajneesh Sharma was appointed as Administrator with immediate effect. The Appellant who is a shareholder of the Corporate Debtor- SIFL filed a Writ Petition under Article 226 of the Constitution of India before the High Court of Bombay challenging the order passed by the RBI superseding the Board of Directors of SIFL and SEFL.

The Writ Petition filed by the Appellant was dismissed by the Bombay High Court .By  Challenging the order a Special Leave Petition was filed by the Appellant before the Supreme Court which was subsequently dismissed by the Supreme Court. The RBI filed CP (IB) No. 295/KB/2021 against SIFL and CP (IB) No.294/KB/2021 against SEFL under Section 227 of the IBC r/w Rules 5 & 6 of the Insolvency and Bankruptcy (Insolvency & Liquidation proceedings of Financial Service Providers and  Application to Adjudicating Authority) Rules, 2019.

Accordingly the Adjudicating Authority by order dated 08.10.2021 admitted both the applications filed under Section 227 and declared the Moratorium in terms of Section 14 of the IBC in respect of financial service providers.

Aggrieved by the  order, the appellant filed an appeal before the tribunal. However the tribunal dismissed the appeal due to a delay of  321 days. Accordingly the appellant filed an appeal before the supreme court. Although the court dismissed the appeal.

Accordingly the appellant filed a recall petition before the Adjudicating Authority  in the CIRP of the Corporate Debtor.

Anjit Kumar, Senior Counsel appearing for the Appellant challenging the order passed by the Adjudicating Authority and he argued that the order passed by the Adjudicating Authority was order passed in violation of principle of natural justice and deserves to be recalled.

Further argued that the default on the part of UCO Bank which relied on the applications filed by the RBI were default during the period of Section 10A and the application filed by the RBI was barred by Section 10A and could not have been entertained. The Adjudicating Authority committed an error of jurisdiction in admitting the application by order dated 08.10.2021 which jurisdiction error needed to be corrected in the recall application.  Hence an order passed without jurisdiction can be recalled by the Adjudicating Authority in exercise of its inherent jurisdiction.

Counsel for the RBI  refuting the submissions of the Counsel for the Appellant submits that the applications for recall filed by the Appellant were not maintainable and deserves to be rejected and has rightly been rejected by the Adjudicating Authority.

Further submitted that Appellant having filed the Appeals unsuccessfully against the order dated 08.10.2021 cannot now resort to filing of recall application before the Adjudicating Authority after 17 months of order of admission passed on 08.10.2021. Hence there was no lack of jurisdiction of the Adjudicating Authority in passing of the impugned order dated 08.10.2021.

Counsel for the SRA has submitted that the Appeals have become infructuous since the Resolution Plan of NARCL which was approved by the CoC has been subsequently approved by this Tribunal by order dated 05.01.2024.

Arun Kathpalia, Senior Counsel appearing for the CoC also contended that there are no grounds made out in the recall applications filed by the Appellant to recall the judgment dated 08.10.2021. Therefore the recall application which was filed under Section 420 of the Companies Act, 2013 could not have been entertained since the power under Section 420(2) was only with rectification of an error apparent on the face of the record.

Therefore After analyzing the submission of both parties the bench comprising  Justice Ashok Bhushan  (Chairperson) and  Barun Mitra (Technical Member) relied upon the decision in case of Union of India (Erstwhile Corporation Bank) vs. Dinkar T. Venkatasubramanian & Ors.- Observed that power to review is not conferred upon this Tribunal but power to recall its judgment is inherent. Therefore  power of recall is not power of the Tribunal to rehear the case to find out any apparent error in the judgment which is the scope of a review of a judgment.

Therefore the bench upheld the petition for recall rejected by the adjudicating authority.

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